Background: The commercialization of second-generation bioethanol has not been realized due to several factors, including poor biomass utilization and high production cost. It is generally accepted that the most important parameters in reducing the production cost are the ethanol yield and the ethanol concentration in the fermentation broth. Agricultural residues contain large amounts of hemicellulose, and the utilization of xylose is thus a plausible way to improve the concentration and yield of ethanol during fermentation. Most naturally occurring ethanol-fermenting microorganisms do not utilize xylose, but a genetically modified yeast strain, TMB3400, has the ability to co-ferment glucose and xylose. However, the xylose uptake rate is only enhanced when the glucose concentration is low. Results: Separate hydrolysis and co-fermentation of steam-pretreated wheat straw (SPWS) combined with wheat-starch hydrolysate feed was performed in two separate processes. The average yield of ethanol and the xylose consumption reached 86% and 69%, respectively, when the hydrolysate of the enzymatically hydrolyzed (18.5% WIS) unwashed SPWS solid fraction and wheat-starch hydrolysate were fed to the fermentor after 1 h of fermentation of the SPWS liquid fraction. In the other configuration, fermentation of the SPWS hydrolysate (7.0% WIS), resulted in an average ethanol yield of 93% from fermentation based on glucose and xylose and complete xylose consumption when wheat-starch hydrolysate was included in the feed. Increased initial cell density in the fermentation (from 5 to 20 g/L) did not increase the ethanol yield, but improved and accelerated xylose consumption in both cases. Conclusions: Higher ethanol yield has been achieved in co-fermentation of xylose and glucose in SPWS hydrolysate when wheat-starch hydrolysate was used as feed, then in co-fermentation of the liquid fraction of SPWS fed with the mixed hydrolysates. Integration of first-generation and second-generation processes also increases the ethanol concentration, resulting in a reduction in the cost of the distillation step, thus improving the process economics.